Chapter 11, Problem 7MCQ

The key difference between residual income and EVA is that EVA

1. a. uses the actual cost of capital for the company rather than a minimum required cost of capital.
2. b. uses the minimum required cost of capital for a company rather than the actual percentage cost of capital.
3. c. is a ratio rather than an absolute dollar amount.
4. d. cannot be negative.
5. e. There is no difference between residual income and EVA.